Raytheon Co. v. Cray, Inc.

258 F. Supp. 3d 781
CourtDistrict Court, E.D. Texas
DecidedJune 29, 2017
DocketCivil Action No. 2:15-CV-01554-JRG
StatusPublished
Cited by8 cases

This text of 258 F. Supp. 3d 781 (Raytheon Co. v. Cray, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Raytheon Co. v. Cray, Inc., 258 F. Supp. 3d 781 (E.D. Tex. 2017).

Opinion

MEMORANDUM OPINION AND ORDER

RODNEY GILSTRAP, UNITED STATES DISTRICT JUDGE

Before the Court is the Motion of Defendant Cray, Inc. (“Cray”) to Transfer Pur[784]*784suant to 28 U.S.C. § 1406(a). (Dkt. No, 256.) Having considered the Parties’ submissions and the relevant authorities, and for the following reasons, the Court finds that the motion should be and is DENIED.

I. BACKGROUND

On September 25, 2015, Raytheon Company ■ (“Raytheon”) filed its Complaint against Cray, Inc., alleging infringement of four patents. (Dkt. No. 1.) Raytheon'as-serts that Cray has directly infringed at least two of Raytheon’s patents by using, selling, or offering to sell high performance computing (“HPC”) products or supercomputer systems to customers within the State of Texas and the Eastern District of Texas. (Dkt, No. 1 ¶¶ 7, 8, 22, 38.) In addition, Raytheon asserts that Cray has indirectly infringed its patents by inducing others in this District to- use the accused supercomputer or HPC products. (Dkt. No. 1 ¶¶ 7, 8, 23, 39.)

On November 25, 2015, Cray' filed a Motion to Dismiss for lack of personal jurisdiction and improper venue. (Dkt. No. 21.) Raytheon responded that at the time of Cray’s Motion to Dismiss, one of Cray’s sales executives, Mr. Douglas Harless, had been working for Cray from within this District for over seven years. (Dkt. No. 22 at 7-8.) Mr. Harless’s. responsibilities at Cray included “new sales and new account development in [the] Central U.S.” as well as “management of key accounts within the Financial, BioMedical and Petroleum Industries.” Id,

In addition, Cray sold an accused XC40 supercomputer to the University of Texas System. (Dkt. No. 21 at 4.) While the accused system was delivered and installed at the University of Texas’s Austin campus, the system was accessed via remote terminals at various University of Texas facilities', including two campuses within the Eastern District of Texas. (Dkt. No. 21 at 4; Dkt. No. 1 ¶ 7.) Based on these.facts, Magistrate Judge Roy S. Payne found that venue was proper in the Eastern District of Texas, under VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), and that the exercise of personal jurisdiction was appropriate. (Dkt. No. 65.) The Court adopted this recommendation. (Dkt. No. 94.)

Discovery .following the Magistrate Judge’s Report and Recommendation revealed- additional, relevant information regarding Cray’s involvement in the Eastern District of Texas. (Dkt. No. 265 at 8-10.)1 [785]*785For example, in a map of Cray’s “Americas Sales Territories,” Cray specifically identified Athens, Texas, and listed Mr. Harless as the “Named Account Manager” located there. (Dkt. No. 265, Ex. C at 2.) In addition, Mr. Harless’s “office” telephone number, which is listed on Cray’s invoices to customers and emails to clients, has an area code associated with several counties in this District. (Dkt. No. 265 at 4; Dkt No. 265, Springfield Deck ¶¶6-7.) Mr. Harless has been identified as the account manager for at least twenty-one separate sales of the accused products to nine different customers. (Dkt No. 265, Springfield Decl. ¶1¶8-9.) The revenue for the accused sales attributed to Mr. Harless exceeds $345 million. Id. In addition to receiving a salary for his sales activities at Cray, Mr. Harless received reimbursement for (1) his cell ‘phone used for business purposes; (2) Internet fees; and (3) mileage or other costs for business travel. (Dkt. No. 265 at 6; Dkt. No. 256, Hoelze-man Deck ¶¶ 4-5.) Although Cray did not pay for any secretarial or support staff, Mr, Harless received direct “administrative support” from Cray’s Minnesota office such that Mr. Harless could continue to work from his home office. (Dkt. No, 256, Hoelzeman Deck ¶ 5.) Under this arrangement, Mr. Harless was able to sell products to customers both within Texas and across the nation. At the time the Complaint was filed, Mr. Harless’s job.responsibilities also extended beyond sales, including the management of key accounts within the financial, biomedical, and petroleum industries. (Dkt. No. 22 at 7-8.)

As Cray eventually disclosed, Mr. Harless was not Cray’s only employee'within the Eastern District of Texas. From 2010 to 2011, Cray employed Mr. Troy Testa as a “Sr. Territory Manager.” (Dkt No. 265, Springfield Deck ¶2.). Like Mr; Harless, Mr. Testa resided in this District and sold Cray’s HPC systems. /⅛ ¶¶ 2-3. Mr. Testa “[s]old [a] $132,000 system at [a] 41% margin” within three months of joining Cray; “[c]losed six new customers in [his] first year[,] including Areva, Amgen and Weir Oil;” and “[h]ad a pipeline of over $6,000,000 on a $2,500,000 quota” for Cray, all while he resided in the Eastern District of Texas. Id.

On June 1, 2017, three months before trial, Cray filed a motion to transfer this case under 28 U.S.C. § 1406(a) in light of the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, — U.S. -, 137 S.Ct. 1514, 197 L.Ed.2d 816 (2017). (Dkt. No. 256.) Cray asserts that venue is improper because (1) Cray does not “reside” in’ this District; and (2) Cray has not committed acts of infringement and does not have a regular and established place of business within this District. (Dkt. No. 256.) '

II. LEGAL STANDARD

A. Establishing Venue Under § 1400(b)

“Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where-the defendant has committed acts of infringement and has-' a regular and established place of business.”. 28 .U.S.C. § 1400(b) (2012); TC Heartland, 137 S.Ct. at 1519 (“§ 1400(b) ‘is the sole and exclusive provision controlling venue in patent infringement actions.’ ” (quoting Fourco Glass Co. [786]*786v. Transmirra Products Corp., 353 U.S. 222, 229, 77 S.Ct. 787, 1 L.Ed.2d 786 (1957))). If venue is not proper, a defendant may move to dismiss the case or transfer it to a district in which the case could have been originally brought. Fed. R. Civ. P. 12(b)(3); 28 U.S.C. § 1406(a).

Under the general venue statute, which defines residency “[f]or all venue purposes,” a domestic corporation resides “in any judicial district in which such defendant is subject to the court’s personal jurisdiction.” 28 U.S.C. § 1391(c). However, the Supreme Court has held that this statute is inapplicable in patent infringement cases. TC Heartland, 137 S.Ct. 1514 at 1519.

While § 1400(b) does not define the word “resides,” the Supreme Court in Fourco Glass Co. v. Transmirra Products Corp. concluded that, under § 1400(b), a domestic corporation resides only in its state of incorporation. 353 U.S. at 226, 77 S.Ct. 787; TC Heartland, 137 S.Ct. at 1521.

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Bluebook (online)
258 F. Supp. 3d 781, Counsel Stack Legal Research, https://law.counselstack.com/opinion/raytheon-co-v-cray-inc-txed-2017.